A special needs trust is a legal instrument that helps concerned parents like you set money aside for your child’s future care. Best of all, it does it without reducing your child’s eligibility for public assistance programs such as Medicare, Medicaid, and Supplemental Social Security Income (SSI) (1). For obvious reasons, it is important that it be prepared with the input of qualified tax and legal advisors. Let’s take a look at how these trusts work:
A trust protects your child’s assets—and eligibility.
If your child relies on government assistance, it’s important to know that many of these programs have strict asset limitations (usually $2,000). A special needs trust can keep your child from exceeding these limits by making sure any assets he or she would otherwise inherit go directly into the trust. That way, you don’t have to worry about jeopardizing your child’s eligibility for assistance, and you can be sure that any money you earmark for his or her care will be used exclusively for that purpose.
You can fund a trust with a wide variety of assets.
You can use almost any combination of assets to fund your special needs trust: stocks, bonds, real estate—even the proceeds from a life insurance policy (provided you name the trust as the beneficiary). In fact, a whole life insurance policy can be a cost-effective way to fund the trust, since they both pay a death benefit (provided premium requirements are met) and any cash value they generate will continue to grow tax-deferred until your death.
Make sure you use a qualified professional.
Your child’s future is too important to leave anything to chance. While special needs trusts have been around for years, they are complex legal instruments that have to be set up properly. Be sure to work with an attorney who1 has plenty of experience in this area, as well as a thorough knowledge of wills and estates.
It takes a special person to care for a special needs child—and to adequately prepare for the child’s future. With a special needs trust, you can take comfort in the fact that you have done everything you can to give your child the resources he or she will need to lead a long and happy life.
This educational third-party article is provided as a courtesy by Anthony E. Marlin, Agent, New York Life Insurance Company and a Registered Representative of NYLIFE Securities LLC (member FINRA, SIPC), a Licensed Insurance Agency and New York Life Company,Marlin & Associates Financial Services, 100 East Jackson, Paulding, Ohio 45879. To learn more about the information or topics discussed, please contact Anthony E. Marlin at 260-704-3272.
